Thursday, July 18, 2013

Get Personal in Business: Have Fewer Problems, Make More Money

This is a reprint of a post from 2011 that is more true today than when I first wrote it. Enjoy it's simplicity, and appropriateness. I repost it because of what I recently read in Ken Blanchard's 2010 offering, Lead With Luv

My Dad used to say that Business is Business, and Personal is Personal. I think he was advising me not to mix my personal life with my professional life. It sounded like good advice, at the time, but the longer I live, the less realistic, practical and productive it actually is.
We could have much better, faster growing, more profitable businesses if we changed the way we approach business and people.
Sometimes we want “Business” to be “Business.”
There’s another business saying Dad used, and I hear even today:
“Don’t take this personally. It is a business decision.”
The only time Dad ever said this was in situations where someone was getting axed, fired, laid-off, removed or replaced. It could be employee or a vendor.
Dad has no exclusive use of the term. Last December, just two days before Christmas, a friend of mine heard similar words. “This is not about you, Bill. It’s a business decision. We wish you all the best.” Then he was handed his walking papers.
“It’s not about you, Bill.” What a ridiculous statement. Of course it is about Bill. Why else is he at the meeting? Tell that to his family.
Sometimes we want “Business” to be “Personal.”
We use an entirely different choice of words when we are courting a client, or new employee.We say things like:
  • “We care about you.”
  • “Your success matters to us.”
  • “We want to be your partner, not a vendor.”
  • “You can trust us. You can count on us. We have your back.”
These are unmistakably personal words. Some are even terms of endearment of sorts.
So, we see that:
  • Business is personal when doing something pleasant. Otherwise, it is business.
  • It is personal when we’re giving; it is business when we’re taking.
  • It is personal when we’re helping; it is business when we’re hurting.
Flip Wilson’s character, said, “The Devil made me do it.” We say, “The Business made me do it.”
We want to take personal responsibility and get credit for the pleasant things we do. But we want no responsibility or blame for those that are unpleasant. We blame “the business.”
I have a shocking observation based on my 30+ years doing business:
All business is personal. Every business is personal. Everyday, all the time.
Think about it. Every activity, every decision, every system, every process, every procedure, every innovation, every creation, every interaction, every sale, every buy, every complaint, every problem, every solution, every idea, every interaction, every communication, every error, every misunderstanding, every lawsuit, every mishap, every success, every failure, all without exception are the result of personal involvement somewhere.
There’s nothing that happens in any business that doesn’t have a personal involvement. Everything in business is done by, for, at, or with people.
Example from The Bailey Building and Loan Association
It’s a Wonderful Life depicts the story of George Bailey, a man whose life is inextricably connected to his family’s business, The Bailey Building and Loan. The personal/business connection is made obvious in each of the business situations presented in the movie.
  • George saves drugstore: Mr. Gower, the druggist, has received a telegram with news that his son had died in combat. (personal) He is so upset that he mis-fills a prescription with poison. (personal) George sees the telegram and realizes Mr. Gower’s mistake. He saves him from certain ruin risking his job (personal) by not delivering the inappropriately filled prescription. (Personal)
  • George rescues his business from 1st run on the bank: George witnesses a “run on the bank” and steps in, canceling his honeymoon. The “run” is caused because his customers heard something and reacted by demanding their deposits in cash. (personal) George’s intervention (personal) convinces them to take only what they need, (personal) thus keeping the bank whole for another day.
  • Uncle Billy’s mistake, and Mr. Potter’s choice creates a problem: The bank is in its worst situation when Uncle Billy mistakenly leaves a deposit in a newspaper at Potter’s. (personal.) Potter knows what happened, and he keeps the money and calls the bake examiners. (personal)
  • Mary Bailey, intervenes to save George and the Building and Loan. George is in dire straights, drunk and looking for a way out when his wife gets word of the situation and takes a course of action. (personal) She calls the bank customers and some of George’s friends and asks for their help. They overwhelmingly come to his aid with their savings and other significant contributions. (personal)
  • The Bank Examiner changes his mind. The bank examiner, seeing the generosity of the community and support of friends, and caught up in the spirit of the moment, tears up the subpoena, and sings with the others. (personal)
Business is Personal
It is inarguable. Business is personal.
In fact, a business can only work as well as its people work. The success of an enterprise is directly related and proportional to how well that workforce works together and with the marketplace and the community. 
People! People! Everywhere!
If business leaders could realize just how personal business really is, they would prioritize an optimized workforce.  It would cause companies to run better, to grow faster and to make more money.
CJ Coolidge is a popular speaker about real productivity in the workplace. 
CJ is the author of Sell More - Work Less- Have More Fun: The Success Secrets of a Dysfunctional Salesman who Sole $B and Made $M Working Part TimeWatch for his new book, The People Driven Business: Unleash your People, Transform your Company.
Visit CJ online at

Tuesday, May 5, 2009

Beware of The Seven Last Words of an Organization

"We've never done it that way before."

Following is my review of Gordon Morrison's latest book, Breaking the Time Barrier. This book may present the most important breakthrough to enhance the efficient development of software in the history of the industry.

The seven last words of the organization: "We've never done it that way before." Embrace them and you'll stifle innovation, creativity and sustained profitability.

What kind of company would self impose limits, ignoring possibilities simply saying, "We've never done it that way before?" My experience with thousands of companies proves that the practice is so common as to make it a proverb. To add insult to injury, the very companies that maintain the practice would deny they do it.

The result is something I call "Hidden Inefficiency Virus," or Business HIV. This is the practice of embracing inefficiencies as unavoidable conditions within a process or a business, and then building expectations which anticipate and accept them. And counter to logical expectations, the practice is nowhere more evident and profit robbing than in the engineering of software. The industry most outwardly committed to creating efficiencies and innovation is its own worse enemy.

Gordon Morrison should know. He's been developing software and systems for years. Frustrated with the amount of time and programming energy needed to constantly fix hyper-complex programs, Gordon traced the problem back to its origin, the "spaghetti codes," the non-sequential code writing methodology used by software engineers since the beginning. Then, simply including a logical temporal element to that mess, he is able to untangle the gnarled lines of spaghetti code, making software easier to trace, debug, validate and reuse. Then he published his invention in Breaking the Time Barrier.

Not only does his COSA process reduce the time to develop and maintain software by as much as 50%, but it maximizes the value of the very individuals responsible for writing it by enabling them to focus on improved applications rather than on internal operational minutia of existing products.

Breaking the Time Barrier is short, to the point, and loaded with examples and illustrations of all kinds, perfect for the advanced engineers to which it is intended. For the non engineer, such as I, the book offers a unique and original philosophical landscape which can lead to new and necessary solutions for overworked and under productive people in today's hyper-dynamic and accelerating world. We all need that.

There is no logical reason for a software producer to resist the elimination of the "HIV" in their business. There is no logical reason a CEO would resist the elimination of "HIV" by failing to embrace outsourcing, either. Well, no reason except, "We've never done it that way before." And that, my friends, is illogical.

CJ is a popular keynote speaker, and a regular contributor to HRTools.
Fine his book, The Squaredime Letters. The feedback has been phenomenal. If you want to get your head around the real forces behind our current recession, you must read this book. Check out some content on Amazon.

Tuesday, April 28, 2009

Human Assets Bring Life to Business Plans: CJ's Remarks at Rice Business Plan Competition 2009

Administaff sponsored the 3rd and 4th place overall award prizes at the prestigious Rice Business Plan Competition in 2009. I was privileged to present these awards to Tendix Development, LLC, from Johns Hopkins University, (Winner also of the Tech Transfer Award, sponsored by DFJ Mercury) and Integrated Diagnostics, from Carnegie Mellon University, (Winner also of the earth/Space Life Science Innovation Award.)

I had less than 2 minutes to speak, and I wanted to use that venue to impact on this audience of talented entrepreneurs from around the world.

Following is the longer version of my talk:

"On the occasion of this grand and prestigious event, with some of the great current and future business minds assembled together, I share wisdom from a great mind of the past. Though he may not have contemplated the activities of the past several days when he spoke, you will most certainly make the application easily yourself. "

"Albert Einstein said, "As far as the laws of mathematics refer to reality, they are not certain; as far as they are certain, they do not refer to reality." "

"What Einstein realized in experience was that there is a difference between mathematics and reality. There is a difference between theory and practicality. One is clean, neat, orderly, predictable and certain; the other is not. On paper, one always works; in reality, it may not. "

"It is as Almanas wrote to Squaredime in my latest book, The Squaredime Letters, “The real world of organizations is much different than what my textbooks led me to anticipate. It is complex, fuzzy, irregular, asymmetrical, random, and in continuous disequilibrium, much different from the orderly and sterile world represented in my early plans.” "

"So, in accordance with the experience of Einstein and Almanas, your business plans, as spectacular, as innovative, as creative and complete as they may be, do not a business make. "

"They now need infused life. And that life must come in the form of inspired, motivated, creative, and innovative people all voluntarily aligning to help create your vision and mission. That life, that unique assemblage of people will be your company’s most valuable, most important, and most critical asset. "

"How well you develop that asset will determine whether even a mediocre business plan becomes an outstanding business, or whether even an outstanding business plan, becomes but another mediocre one. "

"Today, in the end, outstanding or mediocre can make the difference between success and failure. "

"Your most important asset is at the heart of the Administaff mission. Administaff exists to stand shoulder to shoulder with you as our client, to strengthen your ability to best develop your human assets, maximizing your profitability and making life better for everyone involved. "

CJ Coolidge
Rice Business Plan Awards Banquet
April 18, 2009
Westin Galleria hotel
Houston, TX

We could all benefit from this message. It is our people and our people systems which create the greatest opportunity for our companies to succeed. Everything else is just paper.

CJ Coolidge is a regular contributor to
Get your own copy of his groundbreaking book, The Squaredime Letters.
Visit CJ online at

Tuesday, October 14, 2008

Need a Profit Boost? Look to your People

We live in a world where corporate profits need a boost. Most companies need look no further than their employees for answers.

With labor and benefits costs rising, companies need to accomplish increasing outcomes without necessarily increasing their workforce.

In every company there are specific value creators which are offered to customers. As I have written before, these value creators should most definitely be understood and expressed in terms of the realized benefit received by customers.

I refer to these as outcomes. In every company, there are specific activities that the employees in these companies do that clearly impact the delivery of these outcomes to customers. These activities contribute to and create the actual value delivered, the outcomes.

In an environment where there is a decreasing number of available skilled workers necessary to make the appropriate contributions to achieve customer outcomes, there will necessarily be increasing competition for those individuals, thus much greater opportunity of choice for those individuals for employing their strengths in the marketplace.

We have discussed that to find, and to keep good employees in that market, companies will have to offer a whole lot more than money, security, and likeability. They will have to offer an opportunity that brings with it the real potential for self actualization for the employee. The company will have to have a vision to accomplish something deemed by the employee to be significant, at least worthy of his/her investment of his life energy as part of that self actualization.

This vision, in combination with the strengths, aspirations, and passions of individual workers, creates an infinite number of possibilities. It will be dynamic, as the market is dynamic, customers are dynamic, and the workers tasked with its delivery will be dynamic. This provides the foundational strength of the organic model over the mechanical.
My book, The Squaredime Letters, is published.  The feedback has been phenomenal.  If you want to get your head around the real forces behind our current recession, you must read this book.  Check out some content on Amazon.  

A Thinking Democrat Rejects Party Policies: Rothschild Rejects Obama

Democrat and former Hillary supporter, Lady Lynn Forester de Rothschild, rejected Barack Obama, the class warfare elitist, to offer sincere support for John McCain. Her intelligent and well explained decision turned heads.

One of those heads belonged to none less than CNN's Campbell Brown. Brown determined to take Rothschild to task. In an exercize of utter futility, Brown used her "unbiased" news reporter platform in attempt to confound Rothschild's impeccable logic.

Watch how Campbell herself can only resort to ad hominem attacks, using the labels like "bitter" in effort to support her obvious disdain for Lady Rothschild's conclusions that Barack Obama, and current democrat political posers, attempt to foster class warfare in America. This is their only hope to remain electable.

The piece is titled, "Lady Lynn Forester de Rothschild gets schooled on CNN" but this title is just another example of pure political posturing. Watch this piece yourself and you'll see that it was actually Brown who "got schooled."

As I have written, and Lady Rothschild has supported in this interview, there can be no benefit to the American Ideal or prosperity to be gained dividing social and economic classes.

In my post from Sunday October 5, 2008, Capitalism's Potential for Income Inequality: Scourge or Benefit, I wrote about the problem Obama and Campbell believe Democrat policies will improve, that is the problem of increasing income inequality.

You can see that elitism and class warfare as practiced by Obama and Democrats are actually the forces that feed the very problem they "claim" they want to address. This is pure myth because they have no intention of producing a solution. By improving the incomes of their "so called" lower class effectively, they would erode the very voting block they depend on to hold on to the power they really want.

Recognizing individual productivity and the delivery of value as the key to improved income will eliminate the "need" for government programs to protect underproductive and potentially unnecessary workers. It would foster a productivity revolution which would undermine the income redistribution principles upon which Democrat platforms are founded.

Democrats themselves would be forced to resort to productive ideas and policies. Their productive constituency would require it.

Sounds like a timely idea.

CJ Coolidge is a regular contributor to
Get your own copy of his groundbreaking book, The Squaredime Letters.
Visit CJ online at

Sunday, October 12, 2008

The Future of Employment: Maximizing the Value of Employer and Employee

(This is the 6th and final installment in a series of articles about the problems associated with government's attempts to ignore free market principles in a free market world ecomony.)

The solution for all the economic and social woes we face will naturally occur with the improved understanding of value.

The World of Employment Will be Enhanced by Understanding Value.

Let me describe an entirely new relationship between a business owner and the employee which will raise everyone’s standard of living, and reduce the gap between the "haves" and the "have nots." As I have said, everything revolves around the understanding of value. Value can no longer be associated with time, with products of services as ends in themselves. Value must be aligned with the realized ability of a product or service to improve the life conditions for the buyer.

Value for an employee must be seen in the same way. An employee, recognizing the responsibility to provide value as the foundation for determining a worthy wage, must realize, then appropriately communicate, how his participation does just that.

The Employee Approach to Job Search will be Changed. Earnings will be Improved.

Employees will no longer be interested in merely trading time for money. They will be more concerned that their companies, and their company’s customer, are able to be positively and recognizably impacted by what they do. "Getting a job," as though an employee is taking something from someone, will be replaced by rendering a service, as though an employee intends to make a real and recognizable contribution on his company and on the company's customers.

The Employer Approach to Recruiting will be Changed. Earnings will be Improved.

Employers will stop recruiting for positions, too. Instead, they will be communicating their vision and mission, their reason to exist, and will be seeking good people who can align themselves to the completion of those missions.

Employers will not be looking for people to put in positions, so much as looking to discover the impact of having a particular person at work to fulfill the company's mission, and to serve its customers. Employers and employees alike will not want to exchange money for things done, so much as for measurable impact of the things done. This will automatically raise the earnings for an employee’s service as he or she is able to raise the profitability of the employer. Job security will be of little concern.

Great employees who make contributions to the profitability of their employers will be desirable everywhere. Once an employee knows his best contributions, and is able to produce them confidently wherever he is placed, he will have confidence enough to know that will eliminate his fear of serving where there is a mission to be fulfilled.

The More You're Worth, The More You'll be Paid. The Greater Your Impact, The Greater Your Compensation.

Once value is understood in the mainstream of our economies and our lives, it will start to make no difference what any other person is paid. It will be understood that one's pay will be less than the contribution made. Whether you are Roger Clemens, Lebron James, Bill Gates, or John Doe, once you understand how to look for and deliver value, you will begin to earn in accordance with the value you provide, and to your heart's desire.

This is the key to a better future. It is the solution to most every economic and social problem. It is the only way that our long and well developed capitalism can endure. It is the best way to correct perceived income inequality.

We may not remember that there is no "free lunch," but remember we must, if we are to survive.

CJ Coolidge is a regular contributor to HRTools.coms.
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at

Friday, October 10, 2008

Misunderstanding the Value Equasion: Wrong-Headed Teaching in Wrong-Headed Schools

(This is the 5th installment in a series of articles about the problems associated with government's attempts to ignore free market principles in a free market world ecomony.)

There should be little mystery about why the concept of value is so far off base. From our earliest training, we were taught to misunderstand it.

It Started in School. Purpose: Produce Workers for the Industrial Machine

We built a system by which masses of people could be trained to become tools in an industrial machine. Around the end of the 19th century, John Rockefeller, Andrew Carnegie and John Dewey aligned to create the system to produce the workers they needed to participate in the newly developing American industrial economy. And it worked wonderfully. America became the greatest industrial force the world had ever seen. By the millions, American workers entered the workforce, traded their time and their lives for paychecks, and, in doing so, forgot the central meaning of value.

Value became erroneously, acceptably, and inseparably connected with time, and with task.

For at least 2 generations, the definition was reinforced, solidified by story and culture, respected as the "backbone of the economy" as if getting and keeping a job was the prize, and the best economic contribution an American could make. People worked for 40 years, retired with a gold watch and a pension, and died within 5 years.

Generations of Americans were trained to believe that the highest contribution they could make was to have, and to keep a job. In fact, our very identities continue to revolve around this idea. The seemingly most important first question asked when introduced to a new person is, "What do you do?" The main reason parents give to support their children's success in school is that this will enable them to "get a good job."

We Keep Following the Model, Well Beyond its Benefit.

So things went, and so they continue. As long as America had a fairly stable, predictable demographic, and no international competitors to speak of, the system could successfully continue. We continue to follow the Carnegie/Rockefeller/Dewey education system, even better than ever. We admire it, require it, fund it, protect it, and demand it. That very system continues to produce more and more of exactly what it was designed to produce: people who believe a job to be the economic end game, people who associate time with money, and don't understand value. The System Was Created for the World as it Existed in 1940.

The Foundations Have Changed

The basic essential conditions which enabled our education system to produce the necessary contributors to achieve American Industrial greatness no longer exist. The demographic model is completely different. Technology supports quality international competitors for everything we produce. And it is no longer beneficial to have millions of people who don't understand value. In fact, it is detrimental to our survival. It is proverbial that America needs to improve the public education system. All politicians say it. They just don't know why, or how. Their own models are merely copies of the acceptable ones of old, with more bells and whistles. They still motivate students with the prospect of securing a good job upon graduation.

We Will Never Change the System if We Keep Listening to its Trained Advocates

Adding to the problem is the very leaders of the educational institution themselves. These are professional educators, 2nd and 3rd generations of people educated by educators, not educated by real life, or by real economics.

The people who have such a vested interest in the preservation of the very system that creates the economic problems we are beginning to face are the same ones who haven't a clue about the way things really work. They are so separated by time and space and education that they actually believe the unworkable utopian, anti-capitalistic solutions they are now building into the millions of Americans they touch.

Yes, America needs to improve our education system, but very few can even anticipate the extent of the alteration required. Still, at the core of the educational change, will be the understanding of value. We are far from this.

I heard a Comment by John McCain Which Offered a Glimmer of Hope.

I heard this in John McCain's speech at the Republican nominating convention. He was speaking about some of the systems we try to preserve in our country today.

"I know some of you have been left behind in the changing economy and it often seems your government hasn’t even noticed. Government assistance for unemployed workers was designed for the economy of the 1950s. That’s going to change on my watch. My opponent promises to bring back old jobs by wishing away the global economy. We’re going to help workers who’ve lost a job that won’t come back, find a new one that won’t go away."

McCain is talking about the need to educate our people in a way that fully understands the concept of delivering value. As the world changes at hyper-dynamic speed, the old beliefs and systems that were undergirded by those beliefs need to change.

Value must be understood. People must take personal responsibility to continually update their education so that they can stay current in this ever changing world.

CJ Coolidge is a regular contributor to HRTools.coms.
You can now get your own copy of his groundbreaking book,
The Squaredime Letters.
You can vist CJ online at

Tuesday, October 7, 2008

The $800 Billion+ Economic Solution: Does Anyone Really Know What's Going on?

I feel used, lied to, abused. . . and though I've been reading about it, and listening to as many of the talkers as I can stomach, I still don't know exactly what Congress did in passing the so-called $800+B "Rescue Plan" or "Bailout." This leaves me very uncomfortable.

Our US economy doesn't function in a vacuum. It actually reflects the condition of the society it serves. Ours may be weakening, even cracking.

Democratic Societies have Chinks in their Armor.

Scottish historian, Alexander Tyler, wrote something like the following in the 1770s regarding the US experiment in democracy. It is worth thinking about in light of the current economic situation.

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves largesse out of the public treasury.

"From that moment on, the majority will vote for themselves candidates who promise the most benefit from the public treasury, with the result that every democracy will eventually collapse due to loose fiscal policy."

"The average age of the worlds greatest civilizations from the beginning of history, has been about 200 years. During those 200 years, these nations progress through the following sequence:
  1. From Bondage to spiritual faith;
  2. From spiritual faith to great courage;
  3. From courage to liberty;
  4. From liberty to abundance;
  5. From abundance to complacency;
  6. From complacency to apathy;
  7. From apathy to dependence;
  8. From dependence back into bondage."
Methinks that we have transitioned through the 4th, 5th, and 6th all within my lifetime. We sure seem to be rapidly transitioning through the 7th now.

Creating Crises as a Means to Consolidate Power

There was a work composed between WWI and WWII which presented a means by which individuals or institutions could successfully wrest power in a democratic, potentially populist system. It made the case that if one could create difficult situations, challenging the security of the society, and then become the "source of solution" for the situation, the voters would move to surrender their liberties in favor of the delivered security.

I can't validate my sources at present, but I have read that Hitler followed this method in post WWI Germany to secure his position with the full support of Germany's electorate.

I fear similar patterns are at work in the USA today.

I have considered that the Savings and Loan Crisis (1980s) was largely created through legislative fiat, and "solved" by "congressional action." I wonder if the current situation isn't strangely similar.

Congress pressed for a social policy to define home ownership as a "right" during the 1990s. Part of this "policy" encouraged financial institutions to embrace "less-than-prudent" lending policies, and even pressured many to create loans counter to "more prudent" credit wisdom. After a few years of this, they required other creative maneuvers in an attempt to maintain solvency. The "house of cards" couldn't stand forever. A volitile stock-market caused liquidity to evaporate exposing the imprudent lending practices.

Yes, opportunists developed ways to maximize their own gains in light of the policy. And, yes, obfuscation, false valuations and other bad practices resulted. But for the media, the legislative and executive branches of government to place the blame wholly on financial institutions and corporate greed is, at best, incomplete, and worse, irresponsible.

Was the Bailout Just Shoved Down America's Throat?

This absolute "in your face" created crisis ushered in rushed emergency acceptance of this $800+B "rescue plan," a plan passed by the very institutions which created much of the problem in the first place. They shoved it down the throats of constituents who overwhelmingly asked them to consider something else. I, for one, feel taken.

Those "public servants," individuals with the power to create, then blame, then "fix" the problems, aren't economists. Most aren't even businessmen. They may not even be good capitalists.

Except for that degree in law, I am as intelligent as most of our legislators. As is true for them, I can't claim full understanding of world economic dynamics. I don't fully understand how global financial markets interrelate. I don't grasp the totality of the negative effects of a lack of liquidity. I don't grasp fully the potential effect of letting the market make its own correction.

But unlike these lawmakers, I don't believe that the principles at work are so complicated that they cannot be explained well enough for me, and others like me, to adequately understand what this new policy is, how and why it will work, leading, even me, to understand why it is acceptable and necessary.

Trust is Deteriorating Beyond Repair.

John Stossel said that a crisis creates the best opportunity for power seekers to seize power. I can't help but think that this is exactly what has been occurring over these past several years, coming to a head over the last few weeks.

Washington needs a significant house cleaning. But that can only occur if the now complacent, apathetic masses, who seem to be becoming more and more dependent, can turn back the clock, and find the courage to lead the country back into days of real liberty.

Nobody will be happy if we continue on the path from to dependency, right into bondage. I certainly won't.

Monday, October 6, 2008

Income Inequality: Corrected Through Understanding the Concept of Value

(This is the 4th installment in a series of articles about the problems associated with government's attempts to ignore free market principles in a free market world ecomony.)

Misunderstanding the Concept of Value.

What is the real force behind the problem we associate with the inequality of riches? It is, simply, the lack of universal understanding of value. We don't understand what it is, and we don't understand how to create it.

Value is simply, and only, the realization of a greater benefit than the resource expended to secure it. It is the enhanced well being of one realized from the contribution of another.

Value, in economic terms, has the mystical ability to be realized on both sides of a transaction. In fact, in an appropriately negotiated transaction, both parties will gain value, both will be benefitted. A transaction with only one beneficiary is simply theft. To be willing to buy the services of another for a price, I will realize that the benefit I gain is worth more to me than the money I give to secure the service. The service provider will realize that the money he receives is worth more than the time, effort, or material he expends to deliver. Such transactions are accomplished in the free market every day. Give and take. Value given, value realized, value returned.

The Higher the Value Realized, the Higher the Value Given - The More it's Worth, the More you Pay.

Why does Lebron James receive $19MM in endorsements before his 20th birthday? Because the companies making the offer will receive more than $19MM in benefit for what Lebron provides. Does he deserve it? Yes, once you understand the principle of value. If a major league baseball team can earn $50MM in enhanced profitability by obtaining the services of a gifted athlete, why wouldn't it be willing to invest $20MM to get him? Without making that investment, they miss the $30MM differential. To make the decision to not buy the players services would cost the franchise, and be a poor decision. Is the athlete overpaid? Not unless you don't understand value.

The same holds true, even for a commodity. Oil is a commodity. OPEC may control the price of oil, but their controls are only as strong as the value that oil has in the market to which they sell it. Their prices will only stand if someone else is willing to pay what they ask. And, in the case of oil, until the price of the resource exceeds the value produced by using it, the price can rise. It's as simple as that.

Value Has Nothing to do With the Product, the Service, or the Time Itself.

Some would argue that professional athletes are "overpaid." Here's the reason that the issue is an issue at all. We have erroneously determined to quantify the appropriate wage based on the actual task being done, not on the value of the impact of that task upon a particular company in a particular market. We have assessed a wage based on some assigned value of time, not on real value delivered.

After learning that Roger Clemens would be paid $18MM for pitching 1/2 a season, we make activity based value assessments. He might pitch in 20 games. He might throw 100 pitches per outing. That's only 2000 pitches. In activity terms, we might say Roger Clemens would be paid more than $9,000 per pitch.

If this bothers you, you must realize that you don't understand value at all.

Roger Clemens may have pitched, but he isn't paid just to pitch. He is paid to improve the conditions for the franchise willing to pay him. He is paid to be Roger, and to give the team whatever things come from his participation. Roger Clemens fills seats. People come to see Roger pitch. That accounts for something. Roger Clemens helps the team win. He helps less experienced pitchers. He brings a championship mentality to the team culture. These help the team win games. This fills seats, sells beer and hotdogs, advertizing, and on and on. Roger's employment is a value creator for a sports franchise.

It's the same for all professional athletes, for actors, for musicians, for lawyers, for producers, for business builders. Each of these gains substantial financial rewards which are always less than the value they contribute to their employer or the direct customers they serve.

This bears repeating: The financial reward realized, a workers compensation must always be less than the value they contribute to their employer or the direct customers they serve. Always.

Why is Your Compensation so Small? Why is Anyone's?

So what about all the other, little people? What about the "increasing" gap between the "haves" and the "have-nots"? Shouldn't this be adjusted? I won't argue the point. It would be a tremendous benefit to all of us to bring up the individual standard of living for all of us. And, I believe, it can be done. . . but not as long as we continue to misunderstand and misrepresent the concept of value.

We are our own enemy in this effort. We continue to create and maintain the very vehicle which proliferates the problem.

CJ Coolidge is a regular contributor to
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at

Sunday, October 5, 2008

Capitalism's Potential for Income Inequality: Scourge or Benefit

(This is the 3nd installment in a series of articles about the problems associated with government's attempts to ignore free market principles in a free market world ecomony.)

There is Nothing Wrong with Capitalism.

The American Heritage dictionary defines capitalism as an economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.

This is not a hard concept to understand. In a capitalist system, private citizens are permitted to own the means of production, the capital, and can freely invest in that capital out of the increased production, or the profits returned. The more they invest, the more the capital can produce, the higher the profit, the higher the standard of living. Good picture.

Income Inequality: Scourge or Benefit?

I do not defend the companies whose poor compensation strategies allow their executives to be paid untold millions even as their enterprises fail. There is no excuse for this. It is an abomination and an aberration to appropriate capitalism.

The knock, particularly on American capitalism is the apparent inequality it seems to produce. There are a relatively small, but ever growing number of executives and entrepreneurs earning millions while millions of others are earning a relatively small amount.

Remember basic economics. For economic stability, all participants in the economy must provide some contribution to the economy in proportion to the resources they consume.

However, because of age, or infirmity, or whatever, some percentage of every population will not be able to contribute in proportion to their consumption. By the same token, some percentage will be capable of producing more than they need. The balance is struck when the production of the more capable can be allocated to serve the needs of the incapable. This is what happens when a father produces enough to feed his children, as of yet too young to produce for themselves.

This is exactly the condition that has occurred in our well developed capitalist system.

There are the relative few who, through investing in the capital they have purchased and improved, produce substantially more than they need. It is because of this group that our standard of living is ever increasing. There are more who, not wishing to shoulder the risk and responsibility of capital acquisition and improvement, make other, smaller contributions, roughly equivalent to the resources they use, and consume. And there is a yet smaller group who cannot, or will not produce as much as they use or consume. All benefit from the high standard of living available in this country, perhaps the highest in the world.

The Real Conditions Behind Income Imbalance

As I have said, there is an income imbalance. It may even be growing, and may even be a problem, worthy of correction. But the current approaches deny the realities at work, some going so far as to destroy the conditions which encourage the improvements of the quality of life which we all enjoy.

Capitalist Income Imbalance is Essential, Even Good.

The cause of any economic imbalance and its potential remedies are being erroneously identified. Greed and injustice are blamed. Those few who "overproduce" are being accused of performing some injustice. Their "over-production" is viewed, not as the positive contribution that it is, but as some ill-mannered, inappropriately realized gain.

This thinking ignores this important reality: Their production is voluntary. These "over producers" could, just as easily, choose to produce only what resources they use, or consume. They could choose not to invest, and, therefore, not contribute to increase the standard of living for us all.

Legislation and Regulation: A Dangerous Way to Correct the Situation.

With this perspective, increasing law and regulation become the tools used in effort to correct the situation. Investment is penalized. Earning is discouraged. Progress is thwarted.

This approach can only destroy an economy. Eliminating high producers will reduce the resources available, and the improvement of the capital, the means of production, which will lead to a decrease in the standard of living for a growing population. Law and regulation can be used to minimize the imbalance, however. The playing field could certainly be leveled. But, doing so will reduce the productive capacity as the population grows. It will put the economy in decline.

I don't care how socialist or utopian you may be, you don't want the USA to become a 3rd world, simply balanced, economy.

The next installment will offer real practical considerations to the perceived problem of Income Inequality. It has to do with connecting compensation to productivity.

CJ Coolidge is a regular contributor to HRTools.coms.
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at